From the great gas basins of the Rocky Mountains, to the seaboards of the Atlantic and Pacific coasts, to the northernmost reaches of arctic Alaska, battles are being fought between proponents of mineral extraction and advocates of nondevelopment. Debates rage over the amount of public land that should be available for energy production, and how that land should be protected. The oil and gas industry points to its outstanding environmental record, and believes that it can help supply the nation's vital energy needs while carefully preserving the environment. Not surprisingly, another camp vehemently disputes this contention. Underpinning the industry's urgency is the projected growth in energy demand. In its "Annual Energy Outlook 2002," the U.S. Energy Information Administration estimates the nation's total energy consumption will increase more rapidly than domestic energy production through 2020. Petroleum production is expected to decline 0.2% per year to some 5.6 million barrels per day in 2020. The swelling demand will push net oil imports from 53% of consumption in 2000 to 62% in 2020. At the same time, U.S. gas production is expected to increase significantly, jumping from 52.3 billion cubic feet (Bcf) per day in 2000 to 78 Bcf per day in 2020, an average annual growth rate of 2%. That will not be enough to meet anticipated demand, however, and gas imports are forecast to rise from 9.6 Bcf per day in 2000 to 15 Bcf per day in 2020. Whether the nation's drillers can actually supply this gas is an open question, however. Supply is almost wholly domestic, and a considerable resource base lies on lands controlled by the federal government. "We are currently undergoing a transition in gas supply from domestic sources," says Mark Papa, chairman and chief executive officer of Houston-based EOG Resources. For the past 10 years, the U.S. supply has been remarkably stable, running around 52 Bcf per day, plus or minus 1 Bcf. But, U.S. gas production is declining at an ever-sharper rate, dropping steeply from a 16% annual decline in 1990 to an estimated 29% in 2002. "When you combine the increasing decline rate with the decrease in drilling activity during the past year, an almost unprecedented decline in U.S. gas production is occurring. "We see a severe constriction in the supply available to the U.S. gas market during the next several years." And, at the same time supply is significantly constricting, environmental groups are working intensively to shut off access to public lands. Indeed, in three offshore areas-the eastern Gulf of Mexico and the Atlantic and Pacific seaboards-new federal leasing of oil and gas rights is prohibited by moratoria. President George H.W. Bush signed an executive memorandum in 1990 placing a 10-year moratorium on new leasing off much of the nation's coast; President Clinton renewed and extended the moratorium to 2012. An exception to the ban on new leases is one portion of the eastern Gulf south of Gulf Shores, Alabama, which had been part of a strategic plan for many years and already contained 23 blocks under lease. After a firestorm of protest from Florida, the current Bush administration sliced the size of the eastern Gulf sale, held in December 2001, by 75% to 1.5 million acres. Another heated battle of late was the effort to open portions of the Arctic National Wildlife Refuge, adjacent to Prudhoe Bay on Alaska's North Slope. In April, the U.S. Senate defeated a plan to allow oil exploration in ANWR; the current Bush administration had strongly advocated that exploration as part of its national energy plan. To the Rockies The Senate refusal to allow oil and gas leasing in ANWR and the withdrawal of 4.4 million acres from the eastern Gulf sale are both perceived by environmentalists as stunning successes, and those groups are now turning their attention to the next target-the Rocky Mountain region, says Marc Himmelstein, president of Washington-based lobbying firm National Environmental Strategies. The Beltway firm handles issues in the environmental and energy fields, working with such entities as the Department of the Interior, White House, Environmental Protection Agency and Department of Energy. The Bureau of Land Management administers surface activities on some 262 million acres of federal land, and subsurface mineral estates on 700 million acres. Most of these lands are in the 12 Western states, including Alaska-some 84% of the subsurface minerals in Nevada are federally owned, as are 67% of Wyoming and Utah's mineral estates, 46% of New Mexico's and 44% of Colorado's. A mosaic of regulations already governs oil and gas development in the federal onshore, with constraints ranging from no access at all, to seasonal restrictions on activity, to complex federal permitting requirements. But, environmentalists are also throwing any obstacle they can in the way of oil and gas development on federal lands-challenging individual permits to drill, existing leases, future lease sales, environmental impact statements, environmental assessments, and resource-management plans, says Himmelstein. "We face lawsuits at every step of the way." The Rocky Mountain region is the new poster child for the environmental movement, agrees Jim Sims, executive director of Denver-based Western Business Roundtable. "Eastern-based environmental groups are preparing a broad-based attack against energy and resource development in the region." Although the health and vitality of the West depend to a large degree on the health and vitality of its energy and resource-development industries, that linkage is not clear to many of today's Westerners. A heterogeneous mix of ranchers, developers, retirees, and vacation-home owners populates the rural areas; sometimes they own surface rights but not the underlying oil and gas estates. When an oil or gas well is proposed, they can be very alarmed. Too, while environmental groups have strong grassroots organizations and effective public relations campaigns, like attempts by the industry have not been nearly as fruitful. Indeed, the industry's efforts to portray itself as a valuable contributor to local economies, as a responsible steward of the environment, and as a sector essential to national security have failed to engage the public. Moreover, some organizations are actively opposed to the energy industry's message. While many environmental groups are reasonable advocates of their positions, another set goes beyond advocacy to extremes. Members of the more extreme groups have a hard time seeing the West as an economic development region. "Certain of these groups have not just an antidevelopment philosophy, but also a political strategy that is designed to force fundamental economic and lifestyle changes through dramatic increases in conventional energy prices," says Sims. During the next several years, there will be many votes in Congress that are aimed at locking up sections of the West from development. Part of these will be through creation of national parks and monuments; others will be through riders and amendments to appropriation bills that will try to do a little here and a little there. "Politically, these kinds of votes are easy to force, and they are difficult to vote against." Sims is organizing "Save the Rockies Coalition," a group that is reaching beyond the extractive industries to include many of the region's diverse constituencies. "We want to rally the West against what we see as direct attacks on our economy by groups that are largely based in the East. Public lands must be available for public use, and domestic energy development is good for both the region's economic health and for the nation's security." Powder River Basin The coalbed-methane play in the Powder River Basin is front and center in today's public lands controversy. Here, operators, local citizens, national and local environmental groups and various federal agencies are wrestling with how public lands should be used and protected. Drilling operations are being delayed while the industry awaits final environmental impact statements in both Wyoming and Montana. Draft statements, one for Wyoming and one for Montana, were issued May 15. Presently, no federal permits are being issued in Wyoming's Powder River CBM play, with the exception of a few drainage locations in the Wyodak fairway. Permits for conventional wells on federal lands are also affected, because they too have reached their threshold of activity. The impact is tremendous, as the BLM controls more than 60% of the oil and gas rights in the CBM play, although it handles just 10% of the surface. Wyoming's draft EIS, covering impacts for the potential development of as many as 51,000 wells by 2010, is being reworked at present. The regional office of the EPA came out against the BLM's preferred alternative, saying that choice would render the Tongue and Belle Fourche rivers unsuitable for irrigation. The agency was also concerned with air quality and the impacts of the development on fish and wildlife. In Montana, no permits for CBM drilling-on federal, state or fee lands-are being issued at all, outside of a restricted number allowed under a prior settlement agreement. Montana decided to pursue a statewide EIS for CBM development. The EPA also found problems with Montana's Draft EIS. It believed the document did not clearly spell out how watersheds would be protected from degradation, and that it did not sufficiently analyze the impacts of development on air quality, tribal life, groundwater and wildlife. "In the Powder River Basin, we are finding that a traditional EIS is no longer being used," says Himmelstein. Previously, the EIS was a broad-based document that looked at broad impacts over a large geographic area. "Some of the things EPA is proposing, and the environmentalists are pushing even further, are to consider the EIS a localized document for each and every individual lease and well. When you are dealing with the potential of 50,000-plus wells, it is impossible, impractical and not required by the law to be that precise." Currently, the BLM is addressing comments from the federal agencies, state agencies and the public on the drafts for both states. Optimistically, the final EIS documents are expected prior to year-end. After each is issued, a 30-day public comment period will be held. Comments generated during those periods will subsequently be evaluated by the BLM. A "Record of Decision" is the final step, and can be expected as quickly as a month after the close of the comment period or as long as a year later. Still, these are regional EIS documents, and site-specific National Environmental Policy Act analyses will also be required for drilling permits, notes Joe Icenogle, government affairs specialist for Fidelity Exploration & Production Co., a subsidiary of MDU Resources Group. "Some people have the misconception that once the ROD is issued, we'll have a shotgun start to development. That is just not the situation." Widespread problems Even on public lands where oil and gas development is allowed, and the environmental assessments and impact statements have been approved and finalized, securing federal permits can take a great deal of time. Clearly, many in the industry are frustrated by the complexity and slow pace of the process. "It's a challenge to be in the oil and gas business if your leases are on federal lands, due to a number of factors," says John Northington, vice president of National Environmental Strategies. "Part of it is just the bureaucracy." At a seismic symposium sponsored by the Rocky Mountain Association of Geologists and Denver Geophysical Society in early 2002, Stuart Wright, a geophysical advisor with WesternGeco, noted that companies should optimistically plan on four to five months to obtain a federal permit for seismic on lands administered by the BLM. The federal process includes filing a notice of intent to obtain permission to survey the area, a biological survey, an archeological survey, and a review of the permit by the state's historic preservation office. Native American groups also may have to be notified, and a 30-day public comment period is required. After the permit is secured, actual acquisition for a small survey might take another 15 to 40 days. But, restrictions for winter range activity, raptor nesting, sage grouse strutting, elk calving and hunting seasons can shrink the time available for that work to a period from August to mid-November. Drilling permits can be equally as arduous to obtain. Bill White, vice president and chief financial officer for Midland-based Pure Resources Inc., says his firm has had problems obtaining federal permits. "We have federal leases in the San Juan Basin, and when we tried to get permits they would be turned down." The company came up against interpretational differences between what it believed was stated by the regulations and how the local BLM offices interpreted those regulations. In one case, the field office of the BLM had a rule that a location had to be within 300 feet of a road. That particular guideline was not provided for in the regulations, and the company was eventually successful in having the guideline set aside. Pure's approach is to foster relationships with the regulators that recognize both sides of the issues. "We have a very thorough understanding of the regulations, and we know the regulators very well and understand where they are coming from. "Often, the lease stipulations are totally subject to the local BLM jurisdictions. A lot of the interpretations are a function of the political and environmental stances of the individuals involved in the process. Bureaucracies can certainly be arbitrary." Nonetheless, there is some positive movement. "During the past two appropriation cycles-and if the Interior Department appropriations move forward, a third consecutive year-Congress has increased resources provided to process leases, to review the environmental impacts and to provide enforcement," says Himmelstein. Those actions will potentially speed up the industry's capability to access the nation's natural gas. The issue remaining will be the perennial one of economics, and included in the economics will be an operator's estimation of what it will cost to continually fight the environmentalists. "They are not going to go away," he adds. Still, significant volumes of untapped gas reserves reside in the Rocky Mountain area, and it is one of the only domestic areas that can grow its production. "The nation clearly needs to reach a balance between meeting environmental goals and obtaining gas supply, and we think that can be accomplished," says EOG's Papa.